Malaysia has been among the best performing economies in the world after achieve it independence in 1957. However, Malaysia is quite far from where it wants to be to achieve Vision 2020.
Malaysia rapid-growth economy jump started via a formula by taking advantage of cheap wages makes a low-income economy competitive in labour-intensive manufacturing. Factories sprout up, creating jobs and increasing incomes.
However, that growth model eventually runs out of steam. As incomes increase, so do costs, undermining the competitiveness of the old, low-tech manufacturing industries. Country like Malaysia then move “up the value chain,” into exports of more technologically advanced products, like electronics.
To get to that next level – that high-income level – an economy needs to do more than just make stuff by throwing people and money into factories. The economy has to innovate and use labour and capital more productively. That requires an entirely different way of doing business. Instead of just assembling products designed by others, with imported technology, companies must invest more heavily in R&D on their own and employ highly educated and skilled workers to turn those investments into new products and profits.
South Korea is probably the best current example of a developing economy making the leap into the realm of the most advanced. Companies like Samsung and LG are becoming true leaders in their fields.The country relied exports to create rapid gains in income, but they did so differently. South Korea, from its earliest days of export led development in the mid-1960s, had been determined to create home-grown, internationally competitive industries. Though Korean firms supplied big multinationals with components or even entire products, that was never enough – Korea wanted to manufacture its own products under its own brands. The effort was often a painful one – remember Hyundai’s first disastrous foray into the U.S. car market in the late 1980s and early 1990s – but Korea is where it is today because its private companies have been working on getting there for a very long time, backed in full by the financial sector and the government.
Malaysia, on the other hand, relied much, much more on foreign investment to drive industrialization. That’s not a bad thing – multinational companies provide an instant shot of capital, jobs, expertise and technology into a poor country. MNCs, however, aren’t going to develop Malaysian products; that has to take place in the labs and offices of Malaysia’s private businesses. But those businessmen have been content to squeeze profits from serving MNCs and maintaining their original, assembly-based business models.
Malaysia needs to change what it has been doing economically for the past 55 years, the government need to slice apart the bureaucratic red tape that stifles competition and suppresses investment, bolstering the education system so it can churn out more top-notch graduates, and funneling more financial resources to start-ups and other potentially innovative firms.
As conclusion, Malaysians must be reminded that we live in a very competitive and globalised world where the ambition of enjoying high economic growth is also the aspiration of many under-developed and developing countries. Therefore we must aware on our own ability and set the target that we affordable to achieved and everything must through a strategic planning in order to achieve the target.